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IRS Ruling To Create Millions Of Uninsured Americans As It Undermines The Very Intent of Obamacare

While many opponents of the Affordable Care Act have been busy stressing over the penalty they would be required to pay should they fail to purchase health insurance come 2014, it turns out that the IRS is clearing the way to reduce the number of Americans subject to the penalty—while making it near impossible for millions of people to afford suitable coverage for their families, subverting the very purpose of the law itself.

It begins with a poorly drafted provision in the healthcare reform law stating that individuals who receive their health insurance as a benefit of employment will be permitted to take a pass on their company policy and elect to buy their coverage on the health exchange—allowing them to take advantage of the federal healthcare subsidies available to low and middle income Americans—if their company provided health insurance policy is deemed ‘unaffordable’.

‘Unaffordable’ is defined as requiring the employee to pay more than 9.5% of the employee’s household income towards his or her employer provided healthcare benefit.

As an example, let’s take an employee who earns $35,000 a year. According to the IRS rule, if that employee is paying less than $3,325 a year towards their healthcare benefit, that employee will be required to stick with the company health insurance policy and would be barred from taking advantage of the federal subsidies available in the form of tax credits that the exchanges have to offer.

The Kaiser Family Foundation’s 2012 survey of what employees pay towards their employer provided healthcare benefit reveals that the average, individual employee made an annual contribution of $951 towards their health benefit. Thus, there would not appear to be much of a problem here.

But this is where it gets ugly…

The same Kaiser Family Foundation survey reveals that the average contribution of employees who are paying towards a family policy is $4316 a year—a number well in excess of the 9.5% of earnings for someone making just $35,000 a year.

Thus, we would expect that the employee and his family —or, at the least, the remainder of the employee’s family—would be free to head over to the health exchanges to get their insurance and benefit from the subsidies available to those in their earnings bracket, right?

Wrong.

We would be wrong because the Internal Revenue Service has ruled that only the portion of the contribution attributable to the individual employee is to be considered for purposes of determining what is affordable—not the entire contribution an employee with a family pays for family coverage.

Thus, using the example of our employee who is the sole breadwinner in the family and earns $35,000 a year, so long as the contribution directly attributed to his own health coverage is less than $3,325 a year, nobody in the family qualifies for participation on the healthcare exchanges and nobody can qualify for the intended government subsidies.

Using the Kaiser averages, the family in our example will end up paying over 12 percent of their annual income for health insurance—a crushing amount of money for a family earning just $35,000 a year and well beyond what is affordable for many.

The result will be millions of spouses and children left to go uninsured.

How can this possibly make sense when the very purpose of the healthcare reform law is to get more Americans insured rather than less?

“We can see kids falling through the cracks. They will lack access to affordable employer-based family coverage and still be locked out of tax credits to help them buy coverage for their kids in the marketplaces, or exchanges, being established in every state.”

So absurd is this ruling—given the intent and purpose of the Affordable Care Act—Congress will have no choice but to correct the offending passage and set this straight, yes?

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Well, I guess they are qualified as it is within their authority to issue regulations on this sort of thing. However, I feel they misinterpreted the law as it was intended. And if they did not, then the law needs to be amended to fix this issue.

The IRS didn’t write the Affordable Care Act, they just have to follow and enforce what was written. don’t blame the IRS. Congress had to pass the Act to see what was in it – nobody actually knew what they were signing because nobody read it first. With sloppy legislation grabbing such a huge chunk of the US economy, what could possible go wrong?

Don’t be a sucker for a dumb Nancy Pelosi line. Many-if not most members of Congress were fully conversant on the ACA before they voted-both those who voted for it and those who voted against it. I personally discussed it with quite a few Members before the vote and i was fully conversant on the law. It’s amazing how people get so carried away. If you think that nobody in Congress read the law, that would mean you should be equally as upset with those who voted against the law without bothering to discover if it was good legislation.

They may have read the law but not the content. The “law” was passed giving broad powers to bureaucrats to then add the details. This is like one of us writing a check without the amount. What they did was hand Obama what should have been their duty.

Of course there will be many! One would have to struggle to find any piece of important legislation where ambiguities or just plain things that have unintended consequences don’t emerge. Welcome to the real life of passing laws! The issue is fixing things as they come along-also something that is in the norm.

I am glad I am on Medicare through an HMO. Since qualifying for Medicare, everything has stayed the same for me except for my cost, which has gone way down. I am glad that I don’t have to navigate the shoals of Obamacare. Maybe Republicans should rethink their “Family Values” policies. The reality is that few people like to subsidize other families’ irresponsible breeding. Lets call a spade a spade and keep religion out of the debate.